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Offshoring Companies Expand as Economies Recover

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Admin

Thursday, July 15, 2010 |

As the global economy recovers from last year’s recession, the outsourcing and offshoring market has witnessed increased activity as indicated by the latest report from the Everest Research Institute. According to Everest research director Anand Ramesh, where once the growth of offshoring slowed down due to financial reasons or a lack of management focus, it is showing signs of total recovery.

Throughout the course of the recession, offshoring clients in the U.S and other major locations became much more focused on cutting costs. According to Ramesh, this remains true in today’s context as more companies look to offshore work that was once being outsourced to local suppliers.

Offshoring a viable option in locations such as the Philippines and India

However, according to Ramesh, more companies that were once alien to the industry are looking at offshoring as a viable option in locations such as the Philippines and India. This has coincided with what Ramesh perceives as an increase in the credibility and scale of offshore suppliers in major offshoring destinations such as India.

The report by Everest group reveals that many of the Business Process Outsourcing (BPO) industry’s current buyers have plans of expanding aggressively. This claim was backed by data showing that 75% of small and medium-sized companies engaged in offshoring plan to expand their offshore outsourcing operations by over 500 full-time employees in a span of two years. This trend is also seen in large offshoring companies with 90% of the population claiming they had plans of expanding operations by over 500 FTEs as well over the next two years.

Everest defines small adopters in the offshoring industry as organizations that have less than 500 FTEs working offshore. Medium adopters refer to organizations that have 500 to 2,500 FTEs offshore whereas large adopters are organizations with offshore FTEs that already number at over 2,500.

According to the report, India remains the number one offshore location for outsourcing with over 70 percent of buyers in the industry revealing plans to expand in the country. The report also indicates that while India is the top choice, companies are showing a tendency to spread risks by not sending all their work to a single location. The Philippines and China are two alternate locations with a good portion of companies showing interests in expanding to them as well. However, according to Ramesh, China mainly offers BPO services to neighbors such as South Korea and Japan. Meanwhile, Malaysia, Brazil, and Mexico are three other locations that have invited a significant amount of interest from companies looking to expand offshore.